Modi’s Passage To America

Plus: Remember PPP loans? Fraudsters used them to jack up home prices. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

June 23, 2023

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Good morning and happy Friday.

What’s old is new – and so expensive it’ll make your eyes bug out. Furby — the fluffy, bug-eyed, 1990s toy phenomenon — is back. And no, not as NFTs (which may or may not ever come back) but as actual, physical toys. Hasbro said Thursday it’s bringing the child-play/adult-collectible-thing back to store shelves for the first time since 2016.

The new editions will run a stunning $70 per toy — though we’re sure if you keep one in its box, you can sell it for a few pennies more in a decade, or or whenever Hasbro next decides to whip up Furby Fever.

Morning Brief

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Modi, this is the beginning of a beautiful friendship.

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I see you’ve played tweety-regulatey before.

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It’s another round of the inflation blame-game.

Economics

The US Wants India in its Corner

The Biden administration has commenced “Operation Schmooze India” as it looks to become best buds with the South Asian rising economic dynamo.

The objective is twofold: counteract America’s economic dependence on China and influence India to buy fewer weapons from Russia. And from the looks of Indian Prime Minister Narendra Modi’s visit to the White House on Thursday, the plan seems to be off to a good start.

Becoming BFFs

India’s growth has boomed, both in terms of its population and economy. Its headcount recently hit a world-leading 1.4 billion — knocking China out of the top spot for the first time in more than half a century — and its economy has been bolstered by landmark deals from the likes of Apple, Boeing, and Samsung, potentially making it the next big tech and manufacturing hub.

The US and China talk about “decoupling” and toss sanctions and accusations of spying back and forth, but it’s clear the rival nations are rather dependent on one another. The US Department of Commerce reported that both US exports to China and imports from China continued to grow for the third year in a row in 2022, totaling $154 billion and $537 billion, respectively. The US is hoping to offset its deep economic entanglement with China by becoming closer to India, which has surpassed France to become the world’s sixth-largest economy.

And then there is India’s partnership with Russia, its largest arms supplier. Between 2017 and 2022, 31% of Russian weapons exports went to India, according to a study from the Stockholm International Peace Research Institute. Because of its decades-long relationship, India’s military is outfitted with Russian guns, tanks, fighter jets, and helicopters:

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India is set to purchase roughly $3 billion worth of General Atomics’ MQ-9B SeaGaurdian drones from the US, and the countries will jointly produce General Electric F414 engines for India’s next fleet of fighter jets. That’s a big deal as the US would be sharing military tech and schematics with another nation, essentially saying “We trust you.”

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On the tech and manufacturing side, Idaho-based chipmaker Micron is set to start construction on a $2.75 billion semiconductor plant in India sometime this year. The Indian government will fund 50% of the project, 20% will come from the state and Gujarat, and Micro will invest $825 million into it.

One Little Issue, Though: Sure, money and guns make our bifurcating world go round, but India has its own human rights issues that draw scant attention — for now at least. Last year, the International Experts Panel found that Indian authorities have directly and indirectly contributed to human rights violations against Muslims and Christians including denying freedom of expression, wrongful detention, and torture. A senior US official told the Financial Times that Biden would gently broach the topic with Modi but not begin “hectoring, lecturing or scolding” the prime minister. He’ll save that for the Russian arms conversation.

– Griffin Kelly

Tech

Australia Pressures Twitter Over Online Hate

(Photo Credit: Joshua Hoehne/Unsplash)

Twitter won’t be able to respond to its latest crisis with the automated poop emoji email it sends to all inquiring journalists.

Australia’s internet watchdog, the eSafety Commission, said Thursday it has sent Twitter a legal notice demanding it disclose exactly what processes it has in place for curbing hateful conduct on its platform. While regulators and politicians around the world have made rumblings in the past about Twitter’s safety enforcement following Elon Musk’s takeover and draconian downsizing, this is the first time a regulator is threatening to hit it in the wallet.

You Call That A Regulatory Body?

When Musk agreed to buy Twitter he seemed eager to placate regulators that his free-speech/laissez-faire ideals wouldn’t make Twitter incompatible with local laws. In May 2022, he released a video with EU Commissioner Thierry Breton in which the pair enthusiastically agreed Twitter would comply with Europe’s Digital Services Act (DSA), which will introduce broad guardrails on how online platforms wrangle harmful content. “I think we’re very much of the same mind,” Musk said at the time.

A lot can happen in a year. Just last month, Breton said Musk had pulled Twitter out of the EU’s voluntary disinformation agreement. The DSA will come into force on August 25 and Breton issued an ominous tweet, of all mediums: “you can run but you can’t hide.” In the meantime, Australia is moving even faster than Europe to bring Twitter to heel:

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The eSafety Commission said it has received an “increasing number of reports of serious online abuse” on Twitter since Musk took over, and added it received more complaints about abuse on Twitter in the last 12 months than any other platform.

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“Twitter appears to have dropped the ball on tackling hate. A third of all complaints about online hate reported to us are now happening on Twitter,” eSafety Commissioner Julie Inman Grant said in a statement. Pretty impressive given Twitter’s user base is orders of magnitude smaller than platforms like YouTube and Instagram.

Twitter has 28 days to send the commission a detailed report of how it’s responding to online hate, and if it fails to do so it’ll face daily fines of $473,000.

New Sheriff: Australia’s demand comes right as new CEO Linda Yaccarino is trying to re-weave the tapestry Musk unpicked. After he took over, Twitter stopped paying various bills (e.g. rent), but both Bloomberg and The Wall Street Journal reported Wednesday that Yaccarino had resumed paying bills to Google for its cloud services, which sources told the WSJ amounted to over $20 million per month. Twitter also dispatched a cadre of execs to Cannes this month to try to win back a little faith from the advertising world, which involves a different kind of hate problem.

– Isobel Asher Hamilton

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Housing

Did PPP Fraud Spike the Housing Market?

Who’s to blame for inflated housing prices? It might just be pandemic fraudsters.

New research suggests that fraud related to pandemic-era Paycheck Protection Program was so widespread that it spiked housing prices, according to a new study released on Thursday by researchers at the University of Texas McCombs School of Business. That may just explain your new neighbor in the fancy house down the street who vaguely refers to themselves as an entrepreneur.

The Big Extort

Some $800 billion worth of uncollateralized, low-interest loans were distributed as part of the PPP, roughly $117 billion of which was sent to fraudulent claims, according to a previous study from some of the same researchers. And fraudsters were way more likely to purchase new homes with PPP loans than those who secured PPP loans legitimately, the new report found.

The misuse of funds was so widespread that, even when controlling for other factors, the study found housing prices in ZIP codes with high instances of fraud were nearly 6% higher than those in low-fraud areas. So much for victimless crimes. Mad? First, blame the crooks. Then, the UTA scholars suggest, turn your ire toward fintechs:

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While the government first turned toward traditional banks to distribute PPP loans, fast-moving fintech firms quickly became the primary middlemen for the program — and were ultimately involved in over 80% of PPP loans.

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But those fintech firms took a fast-and-loose approach to the quality of loan recipients, the researchers said, making it far easier for fraudsters to get their hands on cheap cash.

Too Fast, Too Furious: “There were a handful of fintechs that grew very, very quickly,” Samuel Kruger, McCombs assistant professor of finance and report co-author, told the Wall Street Journal. “All of their incentives are toward just churning out as many loans as possible…it looks like a lot of these lenders did the bare minimum, if that, in terms of diligence.” And it doesn’t stop at housing. Fraudulent loans could have led to car and luxury goods price inflation as well, the researchers said. Washington, “greedflation” purveyors, and wage-hike-demanding workers — you’re officially off the hook.

– Brian Boyle

Extra Upside

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Sorry, Unicef: US charitable donations hit a thirty-year low.

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Mushroom Kingdom: Mets owner Steve Cohen pours $5 million into psychedelics research and advocacy.

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